Thursday, 31 August 2017

8 ways that you are on your way to perfect credit score

Earlier, the three basic human needs were food, clothing and shelter. But, the basic human necessities of modern man are not three but four—which includes food, clothing, shelter, and a good credit score.

Credit score is basically a three-digit score of your past credit history. This number defines your creditworthiness. It is crucial to maintain a good score as it impacts your ability to get favorable loans and credit cards. The lenders check your score to decide if they will approve your request for credit. In general, the higher the score, the better are your chances of getting a loan approved.
The credit score rules the quality of human life today. With bad credit score your credit worth is low and you cannot raise additional funds to add value to your life. While a good score keeps you credit ready and you can apply for credit card or personal loan as per your ease.

However if your score is not perfect and doesn’t lie between 750 and 900 points, you should not lose heart. Simply use following 8 easy ways and be on a way to perfect credit score.
1.       Keep a check on your credit report.
This is one of the commonly ignored aspects but plays a major role in maintaining a good credit rating. Most people realize the importance of checking a credit report only after their loan application is rejected.

It is simple to keep a check on your CIR. Simply request a free credit report from CIBIL or you can also subscribe for 3 reports annually at a nominal cost. Study the report and look for errors if any. Keeping your report free from errors is one of the simplest ways to keep your score healthy. You just need to contact a bureau and report the errors. If the lender has not closed an account already been paid out, you should contact the lender and ask them to report to the bureau.

2.       Setup automatic payments
Always set up payment reminders in your calendar as it will ensure that you never miss the due date. This will help you in making your payments on time. Timely payment of EMIs and credit card bills is one of key factors that builds your score. If you want a perfect score, it should never be ignored.

3.       Keep your balance low on credit cards
The convenience of credit cards helps us to splurge but it also results in high credit card bills. In order to have a good score, it is important that you keep your credit card balances low. Rolling over high credit card balances entails a very high interest rate and affects the score.
4.       Reduce your debts
When you accumulate too many credit cards and loan accounts you should make a debt reduction plan. It must be followed strictly as excessive credit utilization affects the score. An excellent credit score can give you a lot of financial freedom and keeps you credit ready.

5.       Request higher limits
In case you find yourself using entire credit limit every month you should request higher credit limit. This way your credit utilization percentage is reduced.

6.       Beware, do not close your oldest card
Closing the old accounts might lower your score as it will reduce the overall average length of your credit history. So always ensure that you do not close the oldest card with positive history.
7.       Make a good mix of investments
With good credit history it is easier to avail loans. However you should always try to obtain a good mix of secured and unsecured loans. Your score will improve faster if you have a good mix revolving debt and installment debt. This will also ensure a good credit rating.

8.       Seek professional help
Having a score above 750 makes you eligible for loan and get attractive rates. However when your score is a way below this mark and you seek a loan, you can contact a credit counseling firm for professional advice. They will assess your credit report and share practical ways to improve your score. It would generally take a couple of months to improve the score due to miss reporting or error on the report. While other steps would take more time to show the results.

These are eight quick tips to ensure that your credit score is tilted favorably. Follow them religiously and enjoy a good credit score at all times.

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